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Kurdistan and the battle over oil

January 24, 2014 at 2:14 am

The issue of oil has jumped to prominence in the political relationship between Ankara, Baghdad and Erbil (the capital of the Kurdish region in Iraq), and with it has come many questions and concerns about the interests and options open to the three. The question of oil is intertwined with questions of state security, strategy and independence with the people’s dependence on petroleum products in their daily lives and the potential for collapse. When it comes to Kurdistan it seems as though the question of oil is pivotal for building an independent infrastructure, although it has already made significant progress on its path to independence. If the city of Kirkuk, a multi-ethnic city 235 kilometres north of Baghdad, is not incorporated into the Kurdish region, then it will be difficult to declare a Kurdish state successfully.

Thus, the struggle over oil and its production and distribution is now among the biggest issues for the Kurdish regions. In fact, in this the regions are no different to elsewhere; the battle over oil is not uncommon when it comes to regional and international conflicts of interest relating to energy resources and supply lines. Oil has long been a well-known factor that has encouraged states to redraw geo-political maps.

Kurdistan and oil strategy

Since the adoption of Iraq’s federal constitution, oil has been one of the Kurdish leadership’s primary concerns because it is an essential resource for the construction and establishment of the Kurdish region. Perhaps what has brought this issue to the fore for the Kurdish leadership are the many disputes over oil that Nouri Al-Maliki’s government has had with Erbil and the fact that an oil law has not been passed over the last few years. The lack of such a law has led Kurdistan to strengthen its abilities to export oil on its own. On the one hand, the Kurdish region is well located to export oil to Turkey, the Mediterranean countries and Europe, while on the other the local government there has also opened the door to work with international oil companies that have been enthusiastic over the idea of investing in the region due to the vast benefits they are given in comparison to working with Baghdad. Disputes between the Kurds and Baghdad have been exacerbated due to questions of legality surrounding oil contracts. The Kurdish region claims that Baghdad owes it more than $1.5 billion worth of payments for oil, whereas officials in Baghdad are accusing the Kurds of smuggling truck loads of oil into neighbouring Turkey and Iran illegally. They are also demanding that Kurdish oil production be reduced from 175,000 barrels per day to around 60 or 70,000.

From yet another perspective, there are now clashes between Baghdad and international oil companies that did not take Baghdad’s warnings into consideration despite the fact that they are currently banned from investing in non-Kurdish areas of Iraq. In light of this, one must also take the recent agreement signed between Ankara and Erbil into closer consideration because it is a deal worth billions of dollars that will not only develop oil strategy in the Kurdish region, but will also render it a supplier of oil to the outside for the first time in history. In addition to this agreement, there are rumours of another in which the Kurds will supply 10 billion cubic metres of gas to the outside world via a separate pipeline running through Turkey. This agreement will be part of Kurdish strategy to develop its energy resources. These deals have been signed following recent reports indicating that the Kurdish region’s production of oil has exceeded 400,000 barrels per day and is expected to reach one million barrels by the end of next year and two million barrels within five years. Oil reserves in the region are estimated at around 45 billion barrels and these resources are presumably what make the battle over oil one that goes beyond political differences and emergency situations towards more of a question of political security and strategy.

The oil battle

It is clear the question of oil in Kurdistan can now be classified as a political battle par excellence. It has gone beyond a fight between the Iraqi government and the Kurds over natural and economic resource to a question of political choices and outcomes with legal and constitutional implications. For Baghdad, the oil issue is a question of Iraqi sovereignty. Prime Minister Nouri Al-Maliki has repeated time and again that signing any agreements related to the production and export of oil to the outside is a red line. Officials in Baghdad rejected the Turkish government’s suggestion to form a tripartite committee (Ankara-Baghdad-Erbil) to deal with this issue and instead insisted that should a committee be formed, it would be bilateral between Baghdad and Ankara with representatives from the Kurdish areas. Recently, the central Iraqi government in Baghdad has ended many contracts with oil companies like Total, Chevron and Exxon-Mobil after they signed agreements with Erbil.

In an effort to confront threats from Baghdad, the Kurdish government has announced that it has undertaken measures to counter any potential threats from the Iraqi government. This implies that the battle over oil has turned into a political and strategic tool to sever ties between Baghdad and Erbil. Yet, all of these factors have done very little to sway the Kurdish government’s determination because they worked strategically in a way that was both calm and autonomous. On the one had, its strategy was very liberal and they provided many benefits to oil companies who signed with it, which in turn increased oil production and profits greatly (estimated between 25 per cent and 35 per cent in Kurdistan and a mere 15 per cent and 18 per cent in the rest of Iraq). This prompted many oil companies to move to Kurdistan, which led Baghdad to lose its control over the oil sector and Kurdish revenue in less than two years. On the other hand, Kurdish officials worked tirelessly with Turkey to finalise agreements for exporting oil and gas. They ignored Al-Maliki’s warnings forcing him to send a letter to US President Barack Obama urging him to prohibit American oil companies, namely Chevron and Exxon-Mobil, from signing agreements with the Iraqi Kurdish region.

Thus, aside from tensions between Baghdad and Ankara over signing an agreement with Kurdistan, the fact that the US administration has taken Iraqi concerns into consideration ensures that the battle over oil between Bagdad and Erbil will ignite in the coming period. The Iraqi government has threatened to deprive the Kurdish government of its share of the Iraqi budget, around 17 per cent of the total. The president of the Kurdish government, Barzani Najirfan, responded to these threats by saying that all the agreements signed by the Kurdish government were legal and constitutional and that they will not give up a single one of their rights.

Turkey and Kurdish independence

Turkey aspires to have access to Kurdish oil, especially in light of recent reports that more oil fields have been discovered. The Turkish government believes that building a partnership with Kurdistan will lead to a number of strategic benefits. At the forefront of these is the fact that Turkey will be able to reduce its dependency on oil from other parties, namely Russia and Iran, and it will be able to use these oil resources towards its own economic growth and development, which has experienced a nine per cent growth rate. Furthermore, by taking advantage of the opportunity to resolve the Kurdish issue, Turkey will strengthen its role and its position within the region.

Ankara is now facing the wrath of the Iraqi government despite recent initiatives to renew relations between the two countries. The Turkish government did not take American warnings into account nor did it consider that promoting Kurdish-Turkish relations could lead potentially to Iraq’s disintegration. When it comes to the Kurdish region, oil remains the key to independence regardless of whether or not the way is filled with political and military confrontations with Baghdad. This calls into question the fate of Kirkuk, which has borne the burden of increasing violence due to recent confrontations.

In the midst of the battle over Kurdish oil lies the question of Turkey’s position in this matter and its growing relations with Kurdistan. The Turkish government, which had previously refused to have any form of communication with the Kurdish government, is not only laying out the red carpet for ministers in Istanbul and Ankara, but it has also received them in Diyarbakir, the city that Kurds consider to be their historic capital. Erdogan has even gone so far as to invite Iraqi-Kurdish President Massoud Barzani to Turkey, a controversial decision that still reverberates today.

The fundamental question here is how will the Turkish government make peace with the Kurds while developing its own economic and strategic interests and the possibility that this will lead to the disintegration of Iraq? This question will undoubtedly prompt an even bigger question in Turkey, which is what implications will (Iraqi) Kurdish independence have on Turkish Kurds (who are bigger than their Iraqi counterparts by up to three times, both in terms of population and area of land)?

It has been established that the shared interests between Turkey and Kurdistan are contradictory and that they may collide in the long run because the Kurdish issue is witnessing rapid developments within the context of the whole region. Perhaps what encourages Turkey to deepen its relations with Kurdistan in this highly complex political milieu are its disagreements with Baghdad over its implementation of Iranian policy in the region, a decision that Turkey views as one of the main factors of the deepening rifts in the Syrian crisis. Many believe that the outpouring of Turkish empathy towards Kurdistan can be attributed to Turkey’s nostalgia for the period in which the Ottomans and then the nascent Turkish Republic governed Mosul. Turkey contested Mosul’s incorporation into the British Mandate of Iraq but ultimately lost control of the area in a deal brokered between Turkey and Britain at the League of Nations in 1926. Today, Mosul is a majority Kurdish city that is key to the northern region of Iraq.

In the current regional situation, Turkey’s generous and open diplomatic efforts demonstrate that the country is not very far from affiliating itself diplomatically with Kurdistan on political, cultural, economic and even security levels. Meanwhile, the Kurdish Regional Government has demonstrated that it is compatible with Turkish politics on both bilateral and regional levels and in the form of common political interests and aspirations. However, one cannot deny that these interests and aspirations remain somewhat contradictory as Kurdistan continues to make progress on the path to independence. With all of these recent developments, it seems as though Kurdistan’s geography is being re-defined once again, as it comes one step closer to achieving its dream of becoming an independent nation-state. Meanwhile, power dynamics in the region continue to undergo changes and the Kurds have entered into the equation as key players for the first time in decades.

Turkey’s political strategy will undoubtedly force it to examine itself and re-evaluate its position because its interest in Kurdish oil will help realise Iraqi Kurdistan’s dream of establishing an independent Kurdish state, an outcome that will not be accepted by the rest of the Kurdish population, especially not in Turkey, at least not for a while. It would appear that the conditions causing storms in the rest of the region have triggered a spring in Kurdistan as it comes one step closer to achieving its dream.

The views expressed in this article belong to the author and do not necessarily reflect the editorial policy of Middle East Monitor.